PRESS RELEASE | EXHIBIT 99.1 | |
[PINNACLE SYSTEMS LOGO] | Pinnacle Systems, Inc.
Corporate Office 280 N. Bernardo Avenue Mountain View, CA 94043 Tel: 650-526-1600 Fax: 650-526-1601 www.pinnaclesys.com |
Media Contact
Paulien Ruijssenaars
(650) 237-1648
paulien@pinnaclesys.com
Investor Relations: ir@pinnaclesys.com
PINNACLE SYSTEMS REPORTS RECORD SALES FOR FOURTH QUARTER
AND FULL FISCAL YEAR 2003
Sales in Fiscal 2003 Increased 43% over the Prior Fiscal Year
MOUNTAIN VIEW, Calif., July 29th, 2003—Pinnacle Systems®, Inc. (NASDAQ: PCLE) today announced financial results for the fourth quarter of fiscal 2003, which ended June 30, 2003. Net sales for the full year of fiscal 2003 were $331,000,000, a 43% increase over net sales of $231,791,000 in fiscal 2002. Net sales for the fourth quarter of fiscal 2003 were $89,339,000, a 37% increase over net sales of $65,021,000 in the fourth quarter of last year. GAAP net income for the fourth quarter of fiscal 2003 was $3,456,000 or $0.05 per share compared to a loss of $8,366,000 or $0.14 per share in the fourth quarter of last year.
Pro forma net income for the fourth quarter of fiscal 2003 was $5,895,000 or $0.09 per share. This pro forma net income excludes $3,520,000 in amortization of acquisition-related intangible assets and includes $1,474,000 pro forma income taxes. By way of comparison, the pro forma net income for the fourth quarter of fiscal 2002 was $4,455,000, or $0.07 per share, which excludes $8,903,000 in amortization of acquisition related goodwill and intangible assets and includes $396,000 in pro forma income taxes. The reconciliation of the GAAP to non-GAAP measurements for net income and earnings per share for the fourth quarter of fiscal 2003 are set forth below with Pinnacle Systems’ financial statements.
“We finished the year with a strong fourth quarter,” said J. Kim Fennell, Pinnacle Systems’ President and Chief Executive Officer. “Sales were at an all-time high for the Company, for both the fourth quarter and the full fiscal year. We were particularly pleased with the strong performance of our broadcast business where we took orders of advanced IT based systems from over 100 different broadcasters in the quarter. We balanced that with superb results in our Business and Consumer division increasing sales 67% over the
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same quarter last year. We are continuing to see unique benefits from our strategy to address the digital video needs of customers all the way from beginners to broadcasters.”
Fennell also commented, “We are entering the seasonally slow summer season for both of our divisions and we will provide updated guidance for fiscal 2004 during our quarterly conference call today.”
By division, net sales for the fourth quarter of fiscal 2003 were $37.6 million in the Broadcast and Professional division and $51.8 million in the Business and Consumer division, an 11% and 67% respective increase over the same quarter last fiscal year. Sales in the Business and Consumer division included sales from Steinberg products from the Pinnacle Systems’ acquisition of Steinberg Media Technologies in January of this year. Without the Steinberg products, sales growth in the Business and Consumer division would have been 46% over the same quarter last year.
Recent Business Highlights:
• | Set a company all-time record high for quarterly and full fiscal year sales. |
• | Bookings in the Broadcast & Professional division were well ahead of sales during the quarter. Of these bookings approximately $30 million in orders were for broadcast applications. Over half of these bookings were for news applications including editing, graphics and servers. |
• | Announced the acquisition of the Dazzle digital home video business from SCM Microsystems, and closed the transaction on July 25, 2003. |
• | Announced the agreement to acquire a majority interest in Jungle KK and closed the transaction on July 1, 2003. |
• | Pinnacle Systems Studio® version 8 movie making software was honored for the second year in a row by PC World with the World Class Award for best video editing software. |
• | Commenced shipment of Edition™ 5.0, an editing solution targeted at the sub $1000 professional market. |
• | Commenced shipments of Studio MovieBox DV(TM) and Studio MovieBox USB(TM), two innovative new products that let consumers easily connect almost any camcorder to their PCs (without having to install a PCI card) and edit their home movies. |
• | Commenced shipments of Pinnacle Liquid chrome™, a powerful editing solution targeted at the core of the post production marketplace with a total solution price of below $25,000. |
• | Launched a number of innovative broadcast solutions at the NAB show in April 2003 focusing on improving workflows for content delivery, news, sports and live graphics, in addition to our expanded family of our Palladium networked storage systems. |
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Pinnacle Systems will host an audio web-cast at 2:00 p.m. (Pacific Time) on July 29, 2003, which can be heard live atwww.pinnaclesys.com. Additionally, a replay of the conference call will be available atwww.pinnaclesys.com for two weeks following the call. Thereafter, a transcript of the conference call will be available under the “Investor Relations” section of our website athttp://www.pinnaclesys.com/aboutus/investorrelation.asp?Langue_ID=7 information and will be available until July 29, 2004.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with GAAP, Pinnacle Systems uses non-GAAP measures of pro forma net income and pro forma earnings per share, which are adjusted from our GAAP results to exclude certain expenses. These non-GAAP adjustments are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses that we believe are not indicative of our core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing Pinnacle Systems’ operating results in a manner that is focused on the performance of Pinnacle Systems’ ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.
About Pinnacle Systems, Inc.
Pinnacle Systems provides broadcasters and consumers with cutting-edge digital media creation, storage, and play-back solutions for use at Home, in the Studio and on the Air. Pinnacle Systems’ award winning digital media solutions are in use around the world for broadcast, video and audio editing, DVD and CDR authoring and on the Internet. A recognized industry leader, the company has received eight prestigious Emmy Awards for its technical innovations and carries this commitment throughout all of its product lines. Pinnacle Systems may be reached at (650) 526-1600 or at www.pinnaclesys.com.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding Pinnacle Systems’ growth and financial performance during the fourth quarter of fiscal 2003 relative to the economic environment and the strength of Pinnacle Systems’ strategy
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of focusing on meeting the rapidly expanding and diverse demand for digital video solutions. Forward-looking statements contained in this news release relating to expectations about future events or results are based upon information available to the Company as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, Pinnacle Systems’ actual results may differ materially and adversely from those expressed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to, risks related to the business climate and financial performance for both the Broadcast and Professional and Business and Consumer divisions, any deterioration in the general economic conditions or specifically in the markets into which Pinnacle Systems sells it products, any new competition or new competitive products in the broadcast, professional, business or consumer markets, failure to manage growth and successfully integrate recently acquired businesses and future acquisitions, accuracy or inaccuracy of forecasts regarding inventory and sales demand, failure to keep pace with technological developments in the rapidly changing video industry, and any future impairment charges resulting from an impairment of our goodwill and intangible assets. All information set forth in this release and its attachments is made as of July 29th, 2003, and Pinnacle Systems undertakes no duty to update this information. These and other factors that could affect Pinnacle Systems’ business and financial results are detailed in the Company’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the fiscal year ended June 30, 2002, including, but not limited to, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are on file with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s website atwww.sec.gov. Pinnacle Systems undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
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All trademarks and registered trademarks are the property of their owners.© 2003. Pinnacle Systems, Inc.
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
GAAP | PRO FORMA | ||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||
Net sales | $ | 89,339 | $ | 65,021 | $ | 89,339 | $ | 65,021 | |||||
Cost of sales | 41,709 | 29,437 | 41,709 | 29,437 | |||||||||
Operating expenses: | |||||||||||||
Engineering and product development | 10,935 | 8,560 | 10,935 | 8,560 | |||||||||
Sales, marketing, and service | 26,049 | 19,165 | 26,049 | 19,165 | |||||||||
General and administrative | 5,044 | 4,053 | 5,044 | 4,053 | |||||||||
Amortization of goodwill and intangibles | 3,520 | 8,903 | — | — | |||||||||
Total operating expenses | 45,548 | 40,681 | 42,028 | 31,778 | |||||||||
Operating income (loss) | 2,082 | (5,097 | ) | 5,602 | 3,806 | ||||||||
Interest and other income, net | 1,767 | 1,045 | 1,767 | 1,045 | |||||||||
Income (loss) before income taxes | 3,849 | (4,052 | ) | 7,369 | 4,851 | ||||||||
Income tax expense | 393 | 4,314 | 1,474 | 396 | |||||||||
Net income (loss) | $ | 3,456 | $ | (8,366 | ) | $ | 5,895 | $ | 4,455 | ||||
Net income (loss) per share: | |||||||||||||
Basic | $ | 0.05 | $ | (0.14 | ) | ||||||||
Diluted | $ | 0.05 | $ | (0.14 | ) | $ | 0.09 | $ | 0.07 | ||||
Shares used to compute net income (loss) per share: | |||||||||||||
Basic | 63,014 | 58,710 | |||||||||||
Diluted | 66,103 | 58,710 | 66,103 | 62,130 | |||||||||
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands)
Three Months Ended June 30, | ||||||||
2003 | 2002 | |||||||
Non-GAAP net income | $ | 5,895 | $ | 4,455 | ||||
Amortization of goodwill and intangibles | (3,520 | ) | (8,903 | ) | ||||
Income tax effect | 1,081 | (3,918 | ) | |||||
GAAP net income (loss) | $ | 3,456 | $ | (8,366 | ) | |||
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
June 30, 2003 | June 30, 2002 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and marketable securities | $ | 65,769 | $ | 88,429 | ||||
Restricted cash | 16,890 | — | ||||||
Accounts receivable, net | 55,958 | 32,462 | ||||||
Inventories | 38,086 | 37,432 | ||||||
Deferred income taxes | — | 3,854 | ||||||
Prepaid expenses and other assets | 9,197 | 6,470 | ||||||
Total current assets | 185,900 | 168,647 | ||||||
Marketable securities | 15,652 | — | ||||||
Property and equipment, net | 14,040 | 12,256 | ||||||
Goodwill and other intangibles, net | 89,973 | 75,136 | ||||||
Other assets | 5,311 | 3,518 | ||||||
$ | 310,876 | $ | 259,557 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 17,146 | $ | 12,441 | ||||
Accrued liabilities | 49,489 | 25,177 | ||||||
Deferred revenue | 10,100 | 11,477 | ||||||
Total current liabilities | 76,735 | 49,095 | ||||||
Deferred income taxes | 7,826 | 4,554 | ||||||
Long term lease | 158 | — | ||||||
Total liabilities | 84,719 | 53,649 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 344,101 | 310,874 | ||||||
Treasury stock | (6,508 | ) | (6,508 | ) | ||||
Accumulated deficit | (115,294 | ) | (93,433 | ) | ||||
Accumulated other comprehensive income (loss) | 3,858 | (5,025 | ) | |||||
Total shareholders’ equity | 226,157 | 205,908 | ||||||
$ | 310,876 | $ | 259,557 | |||||
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